Due to fierce competition in the Indian Telecom market; the uprising telecom industry is finding it difficult to keep their revenues intact through voice based services. As markets saturate, ARPUs are dropping and thin profit margins have forced telecom operators to look beyond voice services. VAS has tendered a new horizon of revenues for Indian wireless market. Introduction of Next Generation Networks (NGN), up gradation to packet switched networks, roll out of 3G services and change in mobile handset technology (prices too) have opened new doors for innovative VAS services. Telecom companies are transforming their business models to focus on value added services. The growing demand in the VAS market results into proliferation of other parallel industries like content developers, music and film companies offering their music, cartoon artists, ring tone composures, wall papers, logos, gaming and other audio video services. Today, the VAS industry is boasting to have about 150 companies on board.The Indian VAS market is growing at 40% annually and its current contribution to Telco revenues is almost 10%. The industry has shown an exponential growth in the past few years and the revenues are slated to touch Rs. 6,000 crore mark by the end of financial year 2008.
Challenges Ahead
1. Variety of Products: So far VAS industry has been riding on the popularity of Bollywood by selling music through different VAS products. Currently, music products claim almost 50-60% revenues of total VAS product bucket. Recent survey shows that music products are loosing momentum in especially A grade Circles. WAP is also witnessing the same trend of higher usage in B grade circles. May be it’s because of fewer entertainment options in small cities than metros. Therefore, companies should come with new set of products for urban populace to regain the lost space.
2. Pricing Issues: It is widely accepted fact that in current scenario; VAS products are not reasonably priced. Nowadays, buying a movie DVD is more cost effective than downloading a ringtone through IVR. Games and other stuff are grossly overpriced and least subscribed services. However, High pricing issues can be attributed to involvement of so many parties in delivering a VAS product to end user. There are content owners, content providers (aggregators) and telecom companies to share the revenues. As per present practice, telecom operators keep 60-70% of revenues with them and rest is shared between others. Mergers and acquisitions between content owners and content providers might be a positive step to slash down the cost of products.
3. Network and Technology Issues: Introduction of high end handsets and New Generation Networks will prove to be a boon for VAS industry. But, to make any new product successful; product has to be user friendly first and customers should also be educated about the pricing and usage of the products. Industry should learn from past mistakes like they faced in case of MMS launch which was domed failure amidst much publicity and expected potential. One of the major reasons of MMS fiasco could be attributed to the time of launch as the market was not ready with colored and high-end handsets, which was a pre-requisite of this service, and few handsets which were available; was of beyond affordability. Also the pricing of MMS service was at higher end as compared to normal text messaging.
4. Language issues: At least 40% Indian Population is still illiterate and they can’t use even the basic text message services. More IVR based products would be a good option to reap the benefits of this peculiar market segment. Use of regional languages for these products would also be an added advantage.
Industry is now pretty matured and the customers as well. In rural areas and B grade circles it’s doing extremely well, but to regain a strong foothold amongst urban subscribers, industry needs to think beyond entertainment services. There are lots of opportunities lying untapped in the m-commerce market. Mobile-internet services can offer an opportunity to those who want to surf internet while on the move, and in a country where Wi-fi has just started crawling; it would be a good option to bank on. After restriction on unwanted calls by TRAI, industry has to understand that mobile is one’s personal device and it shouldn’t be used without prior consent of subscriber. As a solution of this problem, operators can think about the products like “mGinger”. This “mGinger” is a revolutionary product which offers monetary incentive to subscribers for every ad delivered to their handsets and makes both the parties (Customer and ad companies) happy. Mobile Screen Savers and USSD services can also be used for text based advertisements. Hello Tunes can be replaced by IVR ads on the condition of offering any monetary benefits like free talktime or No monthly RBT rentals or a limited free usage of any other VAS service.
2. Pricing Issues: It is widely accepted fact that in current scenario; VAS products are not reasonably priced. Nowadays, buying a movie DVD is more cost effective than downloading a ringtone through IVR. Games and other stuff are grossly overpriced and least subscribed services. However, High pricing issues can be attributed to involvement of so many parties in delivering a VAS product to end user. There are content owners, content providers (aggregators) and telecom companies to share the revenues. As per present practice, telecom operators keep 60-70% of revenues with them and rest is shared between others. Mergers and acquisitions between content owners and content providers might be a positive step to slash down the cost of products.
3. Network and Technology Issues: Introduction of high end handsets and New Generation Networks will prove to be a boon for VAS industry. But, to make any new product successful; product has to be user friendly first and customers should also be educated about the pricing and usage of the products. Industry should learn from past mistakes like they faced in case of MMS launch which was domed failure amidst much publicity and expected potential. One of the major reasons of MMS fiasco could be attributed to the time of launch as the market was not ready with colored and high-end handsets, which was a pre-requisite of this service, and few handsets which were available; was of beyond affordability. Also the pricing of MMS service was at higher end as compared to normal text messaging.
4. Language issues: At least 40% Indian Population is still illiterate and they can’t use even the basic text message services. More IVR based products would be a good option to reap the benefits of this peculiar market segment. Use of regional languages for these products would also be an added advantage.
Industry is now pretty matured and the customers as well. In rural areas and B grade circles it’s doing extremely well, but to regain a strong foothold amongst urban subscribers, industry needs to think beyond entertainment services. There are lots of opportunities lying untapped in the m-commerce market. Mobile-internet services can offer an opportunity to those who want to surf internet while on the move, and in a country where Wi-fi has just started crawling; it would be a good option to bank on. After restriction on unwanted calls by TRAI, industry has to understand that mobile is one’s personal device and it shouldn’t be used without prior consent of subscriber. As a solution of this problem, operators can think about the products like “mGinger”. This “mGinger” is a revolutionary product which offers monetary incentive to subscribers for every ad delivered to their handsets and makes both the parties (Customer and ad companies) happy. Mobile Screen Savers and USSD services can also be used for text based advertisements. Hello Tunes can be replaced by IVR ads on the condition of offering any monetary benefits like free talktime or No monthly RBT rentals or a limited free usage of any other VAS service.
1 comment:
With moble web browsing catching on why would a consumer by a ringtone, pic, or song from the telco when they could get it cheaper or free on the web.
The future for telcos is to make money by acting as internet connection providers and billing platforms .
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